Lord Teviot: My Lords, I agree with my noble friend that, by and large, privatisation has been a success. However, as he has rightly said, after 10 years certain matters have to be looked at. Is he aware that this is far too large a subject to be dealt with by a Starred Question? Does he agree that it might be better to delay the discussion until my Unstarred Question is debated on 10th March when we can deal with things properly?

Viscount Goschen: My Lords, I am all for dealing with things properly. Indeed, I relish talking about the bus industry at the Dispatch Box. However, that is a matter for the usual channels.

Lord Stoddart of Swindon: My Lords, I am quite prepared to wait until March for the Unstarred Question debate. But, in the meantime, will the Minister go to Oxford to see how privatisation is working there? If he

3 Feb 1997 : Column 1436

does, and manages to get through the air pollution and noise pollution, will he make inquiries to see whether the law of diminishing returns is operating in that city?

Viscount Goschen: My Lords, from time to time I go to Oxford, but I am sure that my colleagues in the department with direct responsibility for this area of policy are fully aware of developments there.

Lord Clinton-Davis: My Lords, perhaps I may recommend that, before 10th March, the Minister reads the report to which I referred earlier? Does he agree that it makes very serious criticisms? Therefore, what is being done to deal with them instead of doing so, as the Minister has done, in a somewhat complacent way?

Viscount Goschen: My Lords, the noble Lord may be interested to know that I have read the report. It was a major contribution to the enjoyment of the weekend to make sure that I had read it before coming to the Dispatch Box. It is an important subject. As the noble Lord will be aware, it is a very full report; no doubt he has also read every word of it. The fact is that, rather than coming to an instant conclusion on a first reading, it is better to digest the great amount of work that has gone into the report before arriving at our firm conclusions.

Lord Cledwyn of Penrhos: My Lords, will the noble Viscount take the trouble to travel by bus and train from North to South Wales? If he does, he will find himself back in 1850.

Viscount Goschen: My Lords, I have spent quite a good deal of time in Wales during the past year. I shall certainly wish to talk to my colleagues about bus travel in Wales. I shall seek to inform myself further on the subject.

Rochester Prison: Hunger Strike

3.1 p.m.

Lord Dubs asked Her Majesty's Government:

What they are doing to bring to an end the hunger strikes by asylum seekers and others in HM Prison Rochester.

The Minister of State, Home Office (Baroness Blatch): My Lords, the prison and immigration service at Rochester prison are making every effort to care for those detainees who have chosen to refuse to take regular prison meals, but they are also making it clear to them that it is in their own best interest to stop their hunger strike. There is no justification for them to take this action and the right course is for them to end their protest immediately.

Lord Dubs: My Lords, no one will condone a hunger strike--but this is by people who are the victims of torture and persecution throughout the world. Is not the right answer for the Government to say that it is wrong that we should detain people in prisons and detention centres against whom there are no criminal charges

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whatsoever merely on the decision of an official? Would not the right answer be to have a judicial process other than the bail system, which does not work, to safeguard these people and ensure that justice is done? The hunger strike would then be over immediately.

Baroness Blatch: My Lords, I am not absolutely certain what the noble Lord is suggesting. There is a proper process. There is the right of appeal for all people who enter this country and apply for asylum. We detain in our prisons about 1 to 1.5 per cent. only of those applicants whose cases are outstanding. That means that between 98 and 99 per cent. are allowed into the community awaiting the appeal procedure.

The noble Lord referred to offences. I do not intend to use names because it would be inappropriate for me to do so. But some of the people who are operating this protest are involved with crimes, including child abuse, shoplifting, drugs, blackmail, living on immoral earnings and fraud, to name but a few.

Baroness Gardner of Parkes: My Lords, in view of the remark made by the noble Lord that these people have been tortured and have suffered terrible conditions throughout the world, can my noble friend assure us that they are not suffering such terrible conditions in our prisons and there is no question whatever of continuing torture and maltreatment of these people?

Baroness Blatch: My Lords, I can say two things to my noble friend. First, if people are genuine victims of torture that would be sorted out in the substantive consideration of their case. Secondly, these asylum seekers are being looked after. There is a separate wing in the prison and there is no connection with convicted prisoners. There are D and E wings. There is also a hospital wing where some of the detainees are sent if they need medical care and attention. Food and water are provided throughout the day if they wish to partake of it. Medical attention is offered, although sometimes some of them refuse it. Care, attention and counselling have been given to persuade these people not to continue with the protest, and they are continuous.

Lord Jenkins of Putney: My Lords, does the Minister agree that it is quite wrong that anyone should be imprisoned without trial? Why have we reverted to this barbarous and uncivilised practice?

Baroness Blatch: My Lords, I do not agree with the noble Lord that it is barbarous. I have mentioned how few people are detained. They are detained because it is judged that they would not conform to the normal conditions of release. There are good reasons why they are detained, and it is done very rarely. The asylum seekers still have the freedom to apply for bail. Some have done so and in fact one was granted bail. Bail is considered independently of government and after taking into account the likelihood of a detainee conforming to the conditions of release.

Earl Russell: My Lords, can the noble Baroness tell us of any other circumstance in which people may be

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detained in a British prison without trial, without cause shown and without limitation of time? If the answer is no, can she tell us whether asylum seekers are so treated because they are seen as lesser breeds without the law or because the Home Office regards the safeguards as outdated and they are no longer taken seriously?

Baroness Blatch: My Lords, I find that a preposterous premise on which to base a question. I have already given some reasons. Sometimes asylum seekers are detained because on an independent judgment there is considered to be a decided likelihood that they will abscond while awaiting either deportation or for the process to be completed. Some have been detained on conviction or on suspicion of having committed a crime. I have given reasons why they should be detained; and they are treated humanely. We have conformed to all our obligations under national and international law in the way in which we are caring for these detainees.

Lord McIntosh of Haringey: My Lords, the Minister referred to independent judgment. Is it not the case that the United Nations High Commissioner for Refugees requires that the granting of bail should be considered by a competent, independent and impartial authority, whereas in this country it is in the hands of Immigration Department officials, who can hardly claim to be independent? Is it not also the case that, even when bail is granted, an asylum seeker has to obtain two referees and find £2,000 for bail? Does that not of itself increase the number not only of those who are held in detention but of those who feel themselves to be unjustly held?

Baroness Blatch: My Lords, unless the noble Lord has evidence to the contrary, we are not in contravention of our obligations under national and international law. We certainly conform to the United Nations Convention on Refugees.

Bovine Spongiform Encephalopathy Compensation Order 1996

3.7 p.m.

Lord Carter rose to move, That an humble Address be presented to Her Majesty praying that the order (S.I. 1996/3184) laid before the House on 18th December be annulled.

The noble Lord said: My Lords, as these orders were laid under the negative procedure, I have tabled these prayers in order to secure a debate on them. Perhaps I may make it clear at the outset that I do not intend to divide the House at the end of the debate. I believe that it will be for the convenience of the House if we debate the two orders together. The second order can be dealt with more formally when we reach it on the Order Paper.

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With these orders--to coin a phrase as regards the BSE saga--we have reached the end of the beginning. I do not intend to rehearse the whole sorry BSE story today; it has been done often enough. Each time a new piece of information comes to light the responsibility of the Government for this disaster becomes clearer and clearer. Perhaps one day it will be possible to conduct an independent, authoritative inquiry--not to apportion political blame--in order to learn the many lessons to be learnt for government, public administration, scientific policy and the restoration of consumer confidence in our beef industry.

These orders comprise the final part of the five parts of the Florence Agreement negotiated by the Government in June last year. The House will recall that the Prime Minister returned from Florence, claiming a negotiating triumph, saying:

I can recall remarking at the time that I thought that it was very unwise of the Prime Minister to make such a claim and then indeed to compound the problem by actually saying that the export ban would begin to be lifted by October/November of last year. When the Minister replies to the debate, perhaps he could give us the Government's estimate of when they expect the export ban to begin to be lifted.

Having agreed to the selective slaughter scheme as an integral part of the Florence Agreement, the Government announced in September that they were not, in fact, going ahead with the scheme after all. They claimed new scientific evidence in support of their change of stance and suggested that, because of the backlog of slaughterings in the over-30-month scheme, sufficient abattoir capacity was not available for them to be able to implement the selective slaughter scheme.

Two questions arise from the Government's stance last autumn. If the new scientific evidence then was a reason for not going ahead with the selective slaughter scheme, what is the even newer scientific evidence which the Government must now have which has enabled them to change their mind again? Also, if--as was certainly the case--the Government's mismanagement of the over-30-month scheme created an enormous backlog in the abattoirs, why did not the Government lay the orders, take the power to identify the animals to be caught by the scheme and then place restriction orders on those animals? The Minister will remember that the original proposals for the selective slaughter scheme mentioned slaughter or restriction. Indeed, that could have been done under the third order, which does not require parliamentary procedure--the BSE (No.2) Order 1996.

If the Government had done that, slaughtering under that scheme could have started as soon as the backlog of the over-30-month scheme had been cleared. Above all, the farmers who are involved in the scheme would have known where they stood. They would have been able to plan. They would have known what replacements were needed and how many animals they were going to lose. Why did not the Government do

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that? They said in a Statement made by Mrs. Angela Browning that they originally intended to lay the orders last July. Why this incessant chopping and changing? Why did not the Government take the powers last July so that the vets could get on to the farms, identify the animals and place restriction orders on them so that the farmers and everybody else would have known where they stood?

Of course, we all know the real reason for the delay and indecision. The Government knew that whatever they did the export ban would not be lifted. What a triumph of negotiation! First, we had the policy of non-co-operation with our European partners. I can remember the Minister telling me across the Floor of the House last summer that the policy of non-co-operation had produced the Florence Agreement, which the Prime Minister then said would lead to the beginning of the lifting of the export ban by October/November. The Government then said that they would not complete the Florence Agreement after all because the ban would be lifted anyway. Now they are introducing a selective slaughter scheme with apparently no commitment from Brussels regarding the lifting of the ban. Could the Minister please tell the House exactly what has been achieved by those six months of dither and indecision?

There are, of course, a large number of questions about the details of the scheme. It would be helpful when the Minister replies if he could explain how many of the detailed provisions are required by European regulations and how many are entirely within the remit of the UK Government and are not required by the European Union? If one looks at the two orders, it seems clear that the provisions of the first order (on BSE compensation) are entirely within the power of the UK Government and that the second order is required to bring them into line with European requirements. It would be helpful if the Minister could tell us how much of the detail of the scheme is entirely within the remit of the UK Government.

It would also be helpful if the Minister could tell us something about the situation now regarding the proposed certified herd scheme. Has a formal submission been made by Brussels regarding the scheme and the way in which it is supposed to work? When do the Government expect the scheme to start? How will it operate? Is it correct that the great majority of the certified herds at the outset are likely to be in Ulster? Incidentally, the MLC has suggested the title "Export Beef Scheme" rather than the "Certified Herd Scheme", which seems like a good idea.

The Minister will be aware of the very considerable concern that has been expressed by farmers and their organisations regarding the way in which the compensation is to be calculated, the definition of the number of productive animals in a herd and the capping of compensation payments. It would be helpful if the Minister could go into some detail regarding the operation of the scheme and particularly about how the Government respond to the practical points that have been put to them by farmers and their organisations.

Then there is the extraordinary decision to include in-calf heifers in the calculation of productive animals in the herd. In 40 years of farm management accounting,

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I have never included in-calf heifers in a calculation of average herd size. It seems to be a straight Treasury trick just to reduce the number of herds that qualify for top-up compensation through over 10 per cent. of the herd being taken. If the size of the herd is increased by 25 per cent., the chances of having 10 per cent. taken are reduced.

The Government have already said that they estimate the total cost of the scheme as around £120 million. To calculate that figure, they must have an estimate of the amount of top-up compensation within the £120 million. Average herd replacement rates are between 20 per cent. and 25 per cent. A farmer will keep about 25 heifer calves, 25 yearlings and have 25 heifers to be put in calf for every 100 cows. That is how one calculates the replacement rate. As I have said, the Government must have a figure for the amount of top-up compensation within the £120 million. We all know what average herd replacement rates are. Therefore, it should not take a moment to calculate the saving to public funds as a result of including in-calf heifers in the definition of a "herd". It would take only a moment, so perhaps the Minister can give the House the figure when he replies to the debate. We are talking about the saving to public funds of including in-calf heifers in the calculation. Incidentally, how is the in-calf heifer to be defined? Presumably, it will be on a positive pregnancy diagnosis. Who is to do that, and who pays? I saw in the farming press that one of the definitions being suggested was when the heifer is first put to the bull or to AI. If that is correct, it reflects a remarkable degree of optimism regarding the outcome of the service procedure.

On the question of payment, the NFU has pointed out that the Intervention Board has a target to pay farmers within 21 days of animals being removed from the farm. Are the Government prepared to guarantee that timescale? After all, we had a target for the over-30-month scheme which missed by a mile and we were given a target for the lifting of the export ban. The Government must not be surprised, therefore, if in the case of BSE their targets are regarded as something of a movable feast.

I am sure that the Minister will also want to deal with the important question of the effect on quotas in the dairy and suckler herds if animals are removed from the herd as a result of the scheme.

Only this morning a point of which I was not previously aware was drawn to my attention. It seems that if a herd is subject to TB restrictions, movement is controlled and any reactors are taken for slaughter on the basis of 75 per cent. of valuation, subject to the current maximum of £630. It appears that under these orders any BSE selective slaughter culls which are found on farms with TB restrictions will be compensated as TB reactors and not by using the compensation formula set out in the statutory instrument. That compensation formula is on a replacement basis, not market value, and is not subject to the 75 per cent. reduction. It would be helpful if the Minister could clear up that point.

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There is also the vexed question of maternal transmission. Can the Minister give the House the latest information on that? How will the selective slaughter scheme accommodate the problem if there is found to be a low level of maternal transmission in the national herd?

Throughout this whole sorry business the Opposition have behaved responsibly. There has been no attempt in the other place to exploit the Government's non-existent majority. We have every right as an Opposition to point out the Government's shortcomings. As it happens, my time as an Opposition spokesman on agriculture in this House, which commenced in 1987, has almost exactly coincided with the BSE crisis--although the philosophers among your Lordships will recall that a connection is not a cause. I can well remember over the years how the Government have been pressed to take certain actions and how they have responded--or failed to respond. However, my honourable friend Mr. Gavin Strang made it clear in the other place on 21st January when the orders were debated there that he would not ask the House to vote against them, as I did at the beginning of this debate.

We supported the Florence Agreement and made it clear that we would support all necessary measures to bring this crisis to an end. But it is a sorry commentary on this whole business that we are now forced to support orders that will result in the slaughter of perhaps 100,000 perfectly healthy animals with the resultant worry and frustration of the farmers who own them and the cost to the taxpayer. Although the BSE crisis and the stance of our European partners in this matter come long after the days of Winston Churchill, an observation that he made in another place in 1934 is peculiarly apt:

"...the greatest target in the world, a kind of tremendous, fat, valuable cow tied up to attract the beast of prey, we are in a position in which we have never been before".

I beg to move.

Moved, That an humble Address be presented to Her Majesty praying that the order (S.I. 1996/3184) laid before the House on 18th December be annulled.--(Lord Carter.)

3.21 p.m.

The Earl of Kinnoull: My Lords, it is a privilege to follow directly the noble Lord, Lord Carter, on the subject of agriculture. I congratulate him on having achieved 10 years as Opposition spokesman. Perhaps he will continue that role! The noble Lord has introduced a number of timely debates on BSE for which I am sure the House and my noble friend are grateful. However, I detected that the noble Lord's usual balance of experience was somewhat tainted by a political eye in terms of blaming the Government for virtually everything that had happened. No doubt that is totally unfair. This has been the most horrendous experience for agriculture, producers, the Government and even consumers.

I support the regulations despite the fact that there is to be a further dreadful slaughter of approximately 100,000 dairy cows and suckler cows which are to be sacrificed without any real scientific evidence. The

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noble Lord reminds us that as this is the fifth and final stage of the Florence Agreement, in the next few months surely we must expect the start of the lifting of the ban by the Commission.

Like others, I received a comprehensive briefing from the National Farmers Union. I pay tribute both to the National Farmers Union of England and Wales and the National Farmers' Union of Scotland. They have done a fantastic job on behalf of producers and the industry generally in providing hope and seeking to get to grips with this dreadful situation. I cannot claim to have mastered all the nuances of the compensation regulations. No doubt the noble Lord, Lord Mackie, will guide us with his incisive description of what all this means. But it was clear from the briefing that there were two matters which appeared to be unfair and did not really achieve what the Government hoped to achieve--that is to say, the replacement value of the cattle to be slaughtered and fair compensation. The noble Lord, Lord Carter, mentioned in-calf heifers. The situation is a strange one. I am sure that my noble friend will provide a clear explanation as to why this has been drawn as it has. Further, the top-up payment arrangements appear to be somewhat ungenerous at the threshold level. I hope that my noble friend will be able to say something about that.

Referring to the details of the regulations, I hope that my noble friend will have time today to say a little about the programme and procedures for the relaxation of the EU ban and the introduction of the certified herd scheme. At the same time, it would be interesting to know what contribution was being made by the Commission to these regulations in regard to compensation. No doubt my noble friend has figures relating to that.

Clearly, the most important task that faces the Government and producers is to win back the confidence of consumers. This has not been helped by the extraordinary report of the European Parliament committee. I note that it was designated a temporary committee. I hope that it is "very" temporary. It has not been helped by rumours that one reads about, for example, that a German Galloway cow may have passed the disease through maternal transmission. All of these are continuing uncertainties.

I feel that the best way that the industry and both Houses of Parliament can fight on behalf of the industry for the confidence of the consumer is to bring forward the computerised tagging system or tell them what is happening about the investigation and report of the committee and support the efforts of producers in the premium quality beef programmes. I suggest that the important consumer leaders in this country are such organisations as McDonald's and schools. I very much hope that they are looking carefully at all of the actions that the Government and the producers have taken to cleanse the industry of this dreadful disease.

I hope that when my noble friend replies not only will he clarify the compensation terms under the regulations but confirm his confidence that producers can look forward to a light at the end of the tunnel in the not too distant future.

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3.27 p.m.

Lord Mackie of Benshie: My Lords, I like to speak after the noble Lord, Lord Carter, and the noble Earl, Lord Kinnoull. Certainly, the noble Lord, Lord Carter, has provided all of the detail. It gives me greater scope to look at the general situation than if I have to pose the questions that I trust the Minister has taken away to answer.

It is true that this is a necessary political move simply to restore the confidence that we have lost in Europe by making an agreement and then reneging on it for no very good reason. A great many animals which have no prospect of having BSE will be slaughtered, but if that takes out a number of such animals, restores confidence and gets the Government back on a decent footing in Europe there is a chance that the whole matter may be cleared up. We can then make a start on putting the herds in Northern Ireland and Scotland that have had very little BSE onto a footing where they can begin to recapture the markets that they have lost.

I turn to the attitude of the Government. I believe that they need to learn a lesson from the payment of half-compensation originally proposed for animals with BSE which were slaughtered. That must have resulted in quite a number of animals going back into the food chain. They corrected that and paid full compensation, but I hope and trust that they will learn that lesson when it comes to dealing with the herds which have BSE in them. As I understand it, a rough basis is simply going to be that if a herd has an animal which has had BSE, then they will look at all the cattle born in the same year and they may well be slaughtered. This can have an appalling effect on the herd.

I was never a very good stockman, although I was a dairy man. I am afraid to tell you that I was always more interested in the end result in terms of pounds, shillings and pence than I was in the animals; but I know that most breeders of stock are passionately interested in what they are doing and in the animals which they are breeding. I also know that a great many farmers who suffered the complete elimination of their herds in the days of the foot and mouth slaughter suffered terribly, some to the extent of the distress actually killing them.

The Government should approach the negotiations with the farmers whose herds are affected with a great deal of sympathy. Certainly, they want a far higher possible level of compensation than £1,000. I see that the NFU is suggesting a figure of £2,500. A pedigree cow which is producing and has been producing youngsters, whose milk yield rises, is worth a great deal of money in a herd, and to limit it to a figure such as £1,000 cannot be right.

The noble Lord, Lord Carter, correctly attacked the Government for saying that they will change the basis of the herd. I have never heard of a herd of 100 cows being described as 100 cows with followers; one always has the milking cows and then one has the followers: a herd of 100 with the followers associated thereto. It would be grossly unfair. Compensation will be infinitely greater for farmers who buy in the replacements than people with closed herds--and these are the people who are proudest of their herds, who have worked hardest

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with them. It is unfair if there is to be a different basis of compensation. It is a petty, unworthy move, one quite unworthy of our Minister in this House. I am sure that he personally disapproves of it, and I hope that he wins the fight to have it removed.

There is a number of other particular points, but I wish to stress the treatment of the negotiations which take place during the selection of the animals to be taken out of a herd. The compensation is important; but a sympathetic treatment of the individual problems of a pedigree herd owner is also very important.

From this, I hope that the Government will go on to convince first the people of this country and the people of Europe that British beef is the safest in Europe. It almost certainly is, if we are carrying out the regulations properly, because nowhere else are so many safety measures taken, because we had the biggest outbreak. It is as certain as it can be that our beef in this country is probably the safest in Europe. We have taken out the affected parts and we inspect the slaughterhouses properly, I hope. Perhaps the Government should ask a member of the Commission to come and look at any slaughterhouse they choose, without any warning. This sort of thing would do a great deal to advance the day when we can register the animals along the lines already followed in Northern Ireland, where we can promote the excellent product and get the industry back on to a decent footing.

3.35 p.m.

Lord Palmer: My Lords, I too am grateful to the noble Lord, Lord Carter, for once again raising this tragic subject. As I live in Scotland, I wish to support the principled position that has been adopted by the National Farmers' Union of Scotland; namely, the implementation of the Florence Agreement and the lifting of the export ban.

From an early date in this sad business I have had no interest to declare, having gone out of dairy and beef production some years ago. But Scottish farmers have been and are realists. They have recognised and understood consumers' concern for responsible farming practices. They have realised that the Florence Agreement pre-conditions--right or wrong--have set a template for getting back consumer confidence and for getting the export ban lifted. Already during this debate we have realised how increasingly complicated this whole BSE subject has become.

These orders are therefore most welcome. They implement the undertakings given by the Prime Minister last June, since when BSE as been discussed six times in your Lordships' House and there have been no fewer than 60 written answers. These orders provide the opportunity, once in place, to negotiate sales of Scotch beef in overseas markets.

Scottish agriculture is particularly sensitive to the prevailing conditions of beef production and it accounts for 28 per cent. of total Scottish agricultural output. So its exclusion from export markets has been very harmful. Not only did it deny sales that have accounted for 20 per cent. of all markets; it removed the least price-sensitive part of demand. Scotch beef has for

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many years had a deserved niche at the top end of the market throughout Europe. It should be allowed back, and as soon as possible.

As to the details of the measure, only close investigation will prove how many animals actually are in the "at risk" group by virtue of being suspected to have fed from the same materials as calves, as known cases of BSE. As the noble Lord, Lord Mackie, has already mentioned, the number of BSE cases in Scotland was extremely small in any case, and it may be supposed that not many animals will be involved in this additional slaughter. But no matter how small or how large the numbers, it is right in principle that we should support the measure as being in the wider public interest and in the interest of restoring confidence in our rural areas.

For farmers themselves, there is bound to be some disquiet about the compensation scheme. It should not be allowed to delay implementation and some parts have indeed been less than generous. I would like to refer to two aspects of the arrangements. One involves money, the other does not.

The aspect which does not carry any cost implications is the matter of timing. We should not ignore the potential disruption to farm businesses--both beef and dairy--which could arise if a number of cattle have to be taken from a single farm. Where this happens, a suitable transition period must be allowed. In the case of dairy farms, this could be accomplished by a phased removal of animals. Thereby, milk quota obligations could be observed and there could be prevention of too much dislocation to farm businesses.

For beef herds--the suckler herds which are mainly in the most difficult upland areas--it is more a case of extending the timing of replacements. Animal breeding is not like making cars. You cannot step up the production line and make a few more on any given day. This is a terribly important point to take on board. So we must be sensitive to the needs of the farmers affected, most especially where pedigree animals are involved. The recommended solution is to allow an extended period during which compensation assistance can be applied to the replacements.

That brings me to the compensation itself, the money issue. Market value compensation is inadequate for making up the numbers of beef suckler herds. Full replacement cost, including replacement cost of a cow by a heifer with calf at foot, is recommended. And where dislocation costs can be proved, for example in closed herds which have to breed replacements, these should be widely available.

I look forward to receiving the Minister's assurance and I commend the measure to this House.

3.39 p.m.

Lord Stanley of Alderley: My Lords, I am a beef producer, not a dairy farmer, so I reluctantly accept that if we are ever to get the EU to allow our beef into Europe, we must make obeisance, worship, and obey the craven images in Brussels and instigate this totally illogical slaughter.

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The thought of that unnecessary slaughter appals me and if a similar thing happened to my flock, I should be very reluctant to co-operate, to the extent of breaking the law. Our bureaucratic masters must try to understand that to many farmers building up a herd or a flock is their life's work and endeavour. They will feel very strongly about it.

However, at the end of the day, financial considerations can sway ideals and, given fair compensation and efficient management by MAFF, I suppose that I might be persuaded to co-operate. But, sadly, this order does not inspire me with confidence in either the compensation or efficient management by MAFF. I realise that some noble Lords may think that it is not right to compensate at all, but I feel sure that, the Government having taken the decision to do so, all noble Lords would agree that it should be done fairly and efficiently.

This order does not compensate fairly. I see no evidence that MAFF will organise it any more efficiently than it did with the original cull. To embarrass my noble friend Lord Lindsay, I only hope that MAFF will try to do as well in England and Wales in the future as it has in the past done in Scotland.

On compensation, the definition of a "herd" to include in-calf heifers is a disaster. It will militate against our best self-contained herds in favour of the flying herd, for all the reasons given by the noble Lords, Lord Carter and Lord Mackie of Benshie, and clearly stated in the other place on 21st January. This will cause and already has caused ill feeling and non-co-operation. If the scheme is to work, such co-operation is vital.

Can my noble friend therefore help on the following matters: first, will he give a more specific definition of how vets will interpret "cohort years" and "feeding groups"? I hope that he will be able to say that they will be allowed to be flexible and, having been flexible, I hope that he will be able to confirm that their definitions will be acceptable to our lords and masters in Brussels. Secondly, will the Inland Revenue now follow the pattern of including in-calf heifers in the herd as being eligible in future, for Inland Revenue purposes, for the herd basis? What is sauce for the gander must be sauce for the goose, or whichever way it is.

How will vets deal with incorrectly maintained records? It is no good saying that farmers should keep good records. I am sure that I should. That will not solve the problem. If there are bad records we must try somehow to get them right. The only way in which that will be done is by sympathetic and understanding officials, and enough of them.

Finally, there is the matter of payment. The Government have said that they "hope to pay" within 21 days of slaughter. That means 28 days plus from leaving the farm. Bearing in mind the past record of MAFF and WOAD and their poor performance and slow payment with things such as IACS and headage payments, will my noble friend say whether that timelag could be shortened. It would help restore some confidence in MAFF's efficiency. I should say that I have nothing but admiration for the unfortunate

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MAFF officers on the shop floor. My complaint, as I have said before, is further up the line. I would not trust MAFF in Whitehall to run a burger bar. I wish that it would import just one person with current practical knowledge. I suppose that there are no burger bars now!

As the whole BSE problem is crazy, I suppose that we must suggest crazy solutions, such as this order. I wonder whether, like the noble Lord, Lord Carter, my noble friend will say that, if and when we complete the cull, there is any hope of lifting the beef ban.

3.44 p.m.

Lord Grantchester: My Lords, I thank my noble friend Lord Carter for bringing the attention of the House to these statutory instruments relating to the accelerated cull of cattle. I should at the outset like to declare an interest in that I own a dairy farm in Cheshire.

It is generally agreed that this cull cannot be justified on scientific grounds. It has been reported that BSE will die out around the year 2001 irrespective of this cull. Nor can the cull be justified on the grounds of public health, as all at-risk animals are excluded from the food chain by the over-30 months scheme. It cannot be justified on the grounds that it will open up either the domestic market, even from BSE-free herds, as this is a process of discreet proposals; or the export market, as there is no quid pro quo for this in the Florence agreement. If farmers are being asked to support a cull without foundation and to little avail, the response will largely depend on their perception of how they will be treated. It behoves the Government to restore farmers to the position they would have been in had there been no cull. These statutory instruments are deficient on both these points.

Before examining these orders, I should like to point out to your Lordships the unsatisfactory manner in which matters are proceeding at the farm gate. These orders came into force on 24th January and visits to farms by the state veterinary service started on 27th January. I received a letter from my MAFF service centre dated 23rd January which referred me to a scheme booklet. When I telephoned my regional centre I was informed that these booklets had yet to be produced and that I should telephone headquarters at Tolworth. I was visited last Friday by a divisional veterinary officer to have the procedures explained, but even he had not seen the booklet. This is an extremely unsatisfactory state of affairs. In December, the ministry published a discussion document and I am disappointed that the statutory instruments do not differ from this document, given the robust challenges which the industry made to certain proposals contained in it.

There are several deficiencies in the SIs. Take, for instance, the definition of "herd" in paragraph 4(3)(a). The definition's inclusion of immature heifers in calf is entirely contrary to common practice. It also contradicts the Government's usual practice in relation to schemes, census figures and legislation, including that covering taxation on the herd basis. A herd of cows in all other circumstances is considered to include only productive animals; that is, cows that have calved at least once.

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Farmers will inevitably conclude that this unprecedented definition has been used simply as a device to reduce their eligibility for top-up payments. Furthermore, these savings will fall only on those producers and pedigree breeders who rear their own replacements. This definition is unacceptable.

Another deficiency relates to the compensation payments referred to in paragraph 4(1)(a). As the cull is irrelevant as regards public health, any taking of animals by the state must be fully compensated. And by that I mean full replacement cost, not 90 per cent. as in the order. Compensation should also cover consequential losses.

The enhancement of compensation set out in Schedule 2 is also inadequate. Consequential losses do exist below the 10 per cent. of herd threshold proposed by the orders. Also, the £1,000 per animal top-up limit and the maximum level of 25 per cent. of herd are entirely arbitrary figures. The top-up should have no per animal limit, which would simplify calculations. The banding limit should also be amended to reflect the levels proposed by the Country Landowners' Association: namely, below 5 per cent. of herd culled will receive a 10 per cent. top-up; between 5 and 10 per cent. of herd, a 20 per cent. top-up; between 11 and 20 per cent of herd, a 30 per cent. top-up; and more than 20 per cent. of herd, a 40 per cent. top-up.

Perhaps I may also draw your Lordships' attention to the ministry's discussion document and its definitions of "cohorts", "cohort years" and "feeding groups". It is very helpful and welcome that common sense and individual farming practices will be taken into account in drawing up each farmer's list of "exposed" cattle. However, I would ask the noble Earl, Lord Lindsay, to confirm that objections will not be raised by the Standing Veterinary Committee such that the approval of the cull is jeopardised. In this regard, the question of the definition of cohort being extended to include maternal transmission, as mentioned in paragraph 7, has still to be resolved.

The Natal Herd Report, which must be filled in by the veterinary officer when visiting each farm, refers only to the last born calf of BSE cases and then only if it is still in the herd. It would be unacceptable for the cull to begin and payments, including top-ups, to be determined before it was agreed what bearing, if any, maternal transmission has on the scheme as approved. It would be unacceptable for this process to have to be done all over again.

Paragraph 9 of the discussion document refers to "solid food". Are the Government aware that certain milk replacer powders contain added animal protein? I understand that there has been a case of BSE in a herd that did not buy in any foodstuff other than milk replacer.

As regards, paragraphs 23 and 27, accountability for the farmer must end when the animal leaves the farm and the period of compensation must start then. Payment must be within a defined period of time, with penalties for late payment. Discipline is demanded of the Intervention Board. But to make compensation pay-outs only after slaughter is confirmed by the abattoir places the farmer at a disadvantage, complicates matters and lengthens the time period.

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The discussion document also states that the Government will approach the Commission about the impact of slaughtering on other schemes. Can the noble Earl confirm that the HLCA beef and suckler cow premiums will still be paid to farmers who will no longer be able to meet the animal retention conditions of these schemes as a result of the cull? Can the Minister confirm also that there will be no difference in the tax treatment of compensation between animals taken under the compulsory and voluntary provisions of the orders?

These orders are not mere legislative detail but are of fundamental importance to the future of our farming industry. Everyone wishes to see an end to BSE as quickly as possible. All the measures now in place must be enforced fully and effectively as part of the process of building greater confidence in the safety and wholesome nature of British beef. It is, therefore, with great dismay that farmers learned of Germany's rejection of implementing a Community-wide extension of UK safety measures such as the rejection of specified bovine material. That is appalling after last week's news that there has indeed been a case of BSE in Germany.

In view of that, I hope that the noble Earl will confirm that the Government will press for the enforcement of all measures across the whole European Union. As other countries' under-reporting comes to light and further bans are implemented, such as the ban by Russia and Egypt on Irish beef, concern increases that, just as the United Kingdom rebuilds its beef industry, we could suffer from a new collective ban of all European countries' products to third party countries.

Regarding cattle of European origin, can the noble Earl confirm how many have subsequently become confirmed BSE cases? Is it the case that BSE-positive cattle that have been imported and reared in the UK for a period exceeding 22 months are deemed to have become infected from feed within the UK? If this is the case, how will cohorts of these cattle be determined and traced?

Finally, serious thought must be given to ending the rolling nature of the 30-month age for exclusion of beef from the food chain. If we claim that all possible precautions are being enforced, beef can be deemed safe from animals born after a certain date. What is the Government's thinking on this and what date do they have in mind?

Re-cycled meat and bonemeal was rejected from all feedstuffs earlier last year. I understand that a team of EU inspectors declared themselves satisfied with all the measures being implemented at abattoirs during September 1996. Will the noble Earl confirm that the date of 1st September 1996 could be the definitive date?

The farming industry has been in crisis for 10 months and still the Government have not been able to come up with the right measures to give farmers the confidence and security they need to plan for the future. We have before us today two further measures which fall short in several regards. Until the Government respond to these concerns, our doubts over Ministers' ability to find a way out of the crisis will remain. Perhaps it will take a change of government for us to get the action we need.

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3.56 p.m.

Lord Marlesford: My Lords, first, I must declare my interest as a dairy farmer who has had BSE within his herd. I certainly could not support these orders, although I understand that it is a tradition of your Lordships' House that we do not vote against secondary legislation. However, we owe a debt of gratitude to the noble Lord, Lord Carter, for giving us the opportunity to debate these orders. I believe that in order to judge them and learn the lessons, we should look at them against the whole background of this sorry story.

I suggest that the BSE saga has been one of the most expensive examples of government muddle in the annals of public administration in this country. I do not know how much it has cost. We are told £2 billion, £2.3 billion and £2.5 billion. For the purpose of argument, I would happily settle for £2 billion; that is, two thousand million pounds. Let us think of the opportunity cost of that money.

The greatest part of that expenditure cannot be justified neither on the basis that it has contributed significantly and proportionally to public health; or that it has succeeded in restoring our markets overseas; or that it was necessary to restore the British beef market (because I understand that the British domestic beef market, outstandingly in the European context, is already very close to what it was before BSE arose. Of course, that is much to the credit of the good sense of the British people).

First, on public health grounds, as I understand it--I shall be subject to correction--so far there have been only 14 cases of the dreaded CJD. That is with every hospital and doctor in the country on the sharp lookout for cases. It is questionable as to whether CJD is caused by BSE. That is in no way proved as yet. Even if it were, in terms of proportionality and the other calls on public spending of that amount of money, bearing in mind the other diseases which humankind suffers, I do not believe that we could conceivably justify that level of expenditure for that incidence of disease. That is my personal view. Speaking as a farmer, I am not sure that I do not feel more sorry for the taxpayers than for the farmers in this matter with this huge amount of public spending.

In order to learn from the past and thus be able to judge the orders now before us, we need to look at what I believe to have been the four fundamental errors which have been made in handling BSE. I should like to say a few words on the first three but will merely refer to the fourth because it has already been so fully dealt with by other speakers.

The first error was the failure to prevent cross-contamination of foodstuffs. That dates right back to when the noble Lord, Lord Carter, first became Labour spokesman on such matters--no cause and effect--in 1987 or so. It means that no steps were taken by the Ministry of Agriculture at that time to prevent manufacturers of animal foodstuffs from making the foodstuffs in which the suspect materials were not to be included in the same plant as the foodstuffs in which they were still allowed. That was an unforgivable and

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hugely costly mistake which I believe to have been largely responsible for the level of BSE cases over the past eight years. I believe that it has been a major factor.

There will I hope one day be a very specific inquiry as to exactly where the technical advice to Ministers fell down. I believe that fingers should be pointed. Clearly this was not a political matter; indeed, you cannot expect a Minister to think of such things. But the risk became apparent much earlier than when the Government finally took action in March of 1996. That was the date from which it was forbidden to use the same plant and machinery for making foodstuffs in which the banned substances were incorporated as well as foodstuffs in which they were not allowed. I would also suggest that there is quite a responsibility--I hesitate to use the word "liability"--on some of the manufacturers because they continued to use the same plant, thereby hazarding so many animals which ate the contaminated foodstuffs.

The second error was the sad mishandling of public relations in this country. I am afraid that I must blame my right honourable friend Mr. Stephen Dorrell to a large extent. I remember hearing with horror that broadcast on the "Today" programme during which he was being pressed in the irresponsible way that the media engage in from time to time. He said that he would take whatever advice was given, and was then asked whether that meant that he would, if necessary, order the destruction of the entire national herd. Instead of saying, "What an absurd hypothetical question; I have no intention of commenting on such nonsense", he said, "I will merely say that we will take the advice that we are given". Of course, the nine o'clock news led on that--indeed, I sat in my car and listened to the headline, "Minister envisages possibility of the destruction of the entire national herd". As I said, the public relations were not well handled either by the Government or by the media. For the latter, it was a perfectly lovely scare story but it just happened to be a rather serious one for all of us as taxpayers, as farmers and as a nation.

The third error was a lack of appreciation of the diplomatic dimension of the whole affair. There was the assumption that our European colleagues would be united with us in the desire to get British exports of beef back on to world markets and into their markets as soon as possible. However, nothing could have been further from the truth. We all know the degree of Schadenfreude that there is in Europe about Britain. It was really very predictable that, for all sorts of reasons which there is no time to go into now, there was little likelihood of there being other than the rubbing of salt in every wound that could be found. It is of course ironic that, as I understand it, the Germans are those who are now suffering the most in terms of their domestic market because the German people appear to be more panicky about beef than any other country in Europe.

I turn now to the fourth point, which has already been dealt with by other speakers in detail. There has been a lack of clarity, of certainty and of logic in the various schemes which have been muted, "unmuted", put forward, not introduced and which are now being introduced. What, therefore, would be my own view of the final situation? I have examined the incidence of

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BSE at the present time. I have with me one of the Written Answers of 23rd January in which my noble friend Lord Lucas most kindly provided the weekly number of confirmed cases in each week during 1995-96. There has, of course, been a fall but it has been a pretty irregular one.

Let us, for example, compare the average of the first 10 weeks of 1996 with the average of the last 10 weeks of 1995; that is, a 20 week-period. If we do so, we actually find that in the first 10 weeks of 1996 there were 234 confirmed cases a week and that in the last 10 weeks of 1995 there were only 221 cases--an actual increase of 6 per cent. Since then there was a welcome reduction in single figures in the closing weeks of 1996. The average for the last 10 weeks in 1996 is 113 confirmed cases, which means under half the rate during the first 10 weeks of 1996. I believe that at least part of that is due to the fact that no animals are now being fed with contaminated food. Indeed, I believe that that was probably being phased out before the Government introduced their regulations in March 1996.

Given the real situation in Europe, the domestic market in Britain and, indeed, the huge costs incurred so far, quite frankly, if I were advising the Government, my inclination would be to let BSE come to its natural and--it is to be hoped--rather rapid end, which I believe it will. Only when that happens will we be able to get back overseas markets. Perhaps some of those countries will realise that in order to restore confidence in their own beef they should play down rather than play up the risk of British beef. That would be my recommendation. However, I fear that it will fall on deaf ears. Nevertheless, if my noble friend Lord Lindsay has the time to comment on what I have said, I should be most grateful. Indeed, had my noble friend been handling the matter from the beginning, I suspect that we would not be in this situation today.

4.7 p.m.

Lord Peyton of Yeovil: My Lords, I hope that noble Lords will bear with me if I take the opportunity at this stage of the debate to express a few opinions. First, I rather regret--and not for the first time--the convention in your Lordships' House not to oppose or vote against secondary legislation. Secondly, although I shall not go into the details, for me the orders are the culmination of a nightmare saga which seems to have a quality of unreality, garnished with stupidity and even wickedness. The effect of the orders will be destructive of healthy animals; it will be crushing for the people principally involved who have spent a lifetime building up a herd; and it will also be onerous in the extreme for the taxpayer. I beg leave to doubt whether the estimates of the cost will prove to be adequate or whether the compensation thereby provided will be fair.

I fear that we have here just one more instance of a reactive gesture which will be very expensive and which will achieve nothing. I hope desperately that I am wrong, but I cannot imagine that any of those scientists who are at present advising either the Commission or member governments will be ready to recommend the raising of the ban on British beef. That being so, nothing will be achieved by this measure except a great deal of

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expense and considerable misery. I would not have spoken in this debate at this stage had it not been for my heavy heart in the face of proposals which I think are totally unwarranted and ridiculous.

4.10 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (The Earl of Lindsay): My Lords, I join other noble Lords in expressing my gratitude to the noble Lord, Lord Carter, for giving the House the opportunity to discuss the selective cull regulations. It also gives the Government the opportunity to set out the wider context of this almost unprecedented event.

I stress to noble Lords on the other side of the House and to my noble friends Lord Marlesford and Lord Peyton that the Florence framework placed five commitments and prerequisites on which the opening up of the export markets depends. At the same time it placed obligations on our European colleagues and on the European Commission. When this selective cull is under way we will have complied with the fifth and last of the obligations to which we signed up. We will then have kept our side of the bargain. It will then be for all of us, through negotiation, to make sure that the commitments made by our colleagues are also honoured.

I was surprised when the noble Lord, Lord Grantchester, suggested that it would take a change of government to sort this out. I was especially surprised when the noble Lord, Lord Carter, seemed to agree with that sentiment. I think everyone in the entire country believes that the ban is unjust, that it has no basis in common sense, and that there is no scientific basis for the ban on British beef whatever. Yet it was the colleague of the noble Lord, Lord Carter, in another place--the Opposition spokesman on agriculture--who described the ban as being both prudent and wise. The industry was disappointed when it heard that assessment by the honourable Member for Edinburgh, East. This House must remember that it was the Labour Party which felt there was some sense in this ban. The noble Lord, Lord Carter, looks puzzled, but I can refer him to both quotations if he needs them. That single, unjust, unscientific act of banning British beef has caused a greater loss of confidence in the product and throughout our industry than any other single event.

The noble Lord, Lord Carter, in some of his more general remarks, made some allegations which ought to be dealt with. It was at Florence that the Prime Minister insisted that as far as possible the Florence framework would be negotiated through scientific and veterinary committees, and the political element of the lifting of the ban would be minimised as far as possible. It was regarded as being something of a victory--because it was resisted initially--that the political dimension should be put on the back seat as much as possible.

Having established therefore that science and empirical data form a part of the process, it would have been a dereliction of duty on the part of the Government if, when the new scientific evidence was produced over the summer, we had simply ignored it and pretended that, despite the scientific element discussed at Florence,

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we were going to disregard science from then on. Since BSE was first identified in the late 1980s we have always taken account of the latest scientific understanding of it, and we have always promptly followed the advice of those scientists who are widely considered to know most about it. To have then disregarded the scientific data that emerged this summer--which was not available to anyone else in Europe when the Florence Agreement was signed--would have been bad government. It was not only the United Kingdom Government who wanted to assess that new science in the light of the selective cull that had been agreed at Florence; the European Commission and Commission advisers wanted to make sure whether or not the new science could be reconciled with the selective cull.

The noble Lord, Lord Carter, suggests that we were chopping and changing; we were quite simply making sure that the latest science did not in any way cast doubt on the plans that had been signed at Florence. I reiterate that the Commission as much as ourselves sought to examine that. The noble Lord, Lord Carter, also suggested that the backlog in the abattoirs created by the over-30-months scheme, which was a legitimate obstacle to starting the selective cull sooner, was an irrelevance. I remind the House and articulate an interest on behalf of our dairy and beef industry in saying that, had we identified farms and placed restriction orders on individual animals on farms before we were able to process them, slaughter them and pay compensation for them, we would in effect have blighted not only animals but, inevitably, have cast a blight over farms too. What would the farmers have been able to do? The restriction orders would have been in place, the reactor ear tags would have been in the ears of the cattle, and people would have known that those farms were listed as BSE-affected farms. However, the cattle would have stayed on the farms because the over-30-months scheme was taking all our capacity. The farmers would have had to look after those animals without any compensation and without our being able to see the process through quickly and efficiently. There was a sound practical reason for making sure that we had capacity in our slaughter system before we started on the selective cull.

A number of noble Lords have mentioned some general points, not least the noble Lords, Lord Mackie and Lord Grantchester, and my noble friends Lord Peyton and Lord Marlesford. I must turn to some of the specific details of the orders, but I shall deal with one other aspect that lies behind the need for these orders. A number of noble Lords have suggested there is no scientific basis for a selective cull. However, there is a scientific basis for it in that veterinary scientists have identified these animals as being those which are most likely to have been exposed to infected feed. Therefore, these are the animals which are conceivably most at risk. The scientific community has said that BSE will not die out before a specific year--which may be the year 2001--through introducing a selective cull. The logic of choosing these animals is based on science.

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The noble Lord, Lord Grantchester, and my noble friend Lord Marlesford were in a sense right to say that the end date of BSE as a problem in this country would not change. However, the decline in the incidence of BSE in the United Kingdom has already fallen dramatically, despite the specific periods to which my noble friend Lord Marlesford chose to refer. The selective cull can only accelerate the speed with which that decline is evidenced.

The noble Lord, Lord Grantchester, was absolutely wrong when he suggested that there was no link between the selective cull and the reopening of the export markets. I think it is common knowledge throughout the industry--I know that he is a prominent member of that industry--and it is certainly common knowledge throughout all the farmers' unions of the United Kingdom which all endorse this cull, that we shall not get beef or beef products from this country back on to the world markets until we have carried out this selective cull. Therefore there is an inextricable link between a selective cull being initiated and negotiations to open up our export markets. No noble Lord should forget that there is a link between the selective cull as the last prerequisite to the opening up of the export markets, and the lift that that will give to the British domestic market in beef.

My noble friend Lord Marlesford doubted whether there was a link between the £2 billion so far committed--it will probably be more in the three years from March 20th 1996--and the recovery of confidence within the British domestic market. I have to disagree completely with my noble friend. It was the measures that we took quickly after 20th March, not least the over-30-months scheme, that helped restore British public confidence in beef as a product. While I disagree with my noble friend's analysis, he was right to point out how strong has been British consumers' confidence in beef. It is heartening to everyone involved in the crisis.

Towards the end of last year, there were months when more hindquarter quality British beef products were being sold than were sold 12 months earlier, prior to the BSE crisis. Two large retailers at present are selling more beef from Scotland, for instance, than they ever sold before. The confidence that the British consumer has shown in British beef has been tremendous. However, the £2 billion, as part of the first two years of confidence building and industry building measures, will be vital to that trend. My noble friend cannot say that there is no connection between the two.

The issues relating specifically to the orders are the result of the agreement that we signed at Florence. As I said, the possibility is that although the science that emerged during the summer months has not caused us to change our minds about the current details of the cull, when the maternal transmission results from the long-running study are available in February or March, some adjustment may be made to take account of the findings. We cannot be definitive on that at present but it will become clear shortly.

Therefore, in this debate we are dealing with cattle born in one voluntary and three compulsory cohorts spanning July 1989 to June 1993. Various noble Lords

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have speculated about the exact numbers with which we are dealing. No one--not even the veterinary scientist charged with seeking to give best estimates--knows how many of the cattle from those cohorts will have been dealt with through the over-30-months scheme or some other means.

The orders concerned are the Selective Cull (Enforcement of Community Compensation Conditions) Regulations 1996 and the BSE Compensation Order 1996. Noble Lords will be aware that there is a third related order, as the noble Lord, Lord Carter, pointed out, which is not subject to parliamentary procedure. That is the BSE (No.2) Order 1996 which confers powers to restrict and slaughter animals. Taken together, these measures provide the enabling framework for the selective cull.

The selective cull compensation regulations give effect to the European Commission regulation which provides for the co-financing of the compensation by the European Union. I can tell my noble friend Lord Kinnoull that the European contribution is 70 per cent. of the market value of the compensation that will be paid to affected animals. The Commission regulation relates to the slaughter, treatment and disposal of cull animals identical to those for the over-30-months scheme. Finally, the compensation regulations create offences and specify penalties.

The BSE Compensation Order 1996 revokes and replaces the 1994 Order, and contains new provisions prescribing the amount of compensation payable for animals slaughtered under the selective cull. I cannot give the noble Lord, Lord Carter, an exact distribution among the orders between those details which can be attributed directly to a UK prerogative and those which can be directly attributed to European obligation. However, the entire framework of orders with which we deal today arises from the commitments we made at the Florence framework, so there is a European dimension to almost everything at which we look.

I shall turn to compensation payments to farmers in a moment, but first, I wish to cover other issues which do not deal with compensation.

Most importantly, I must stress that the cull arrangements between the agriculture departments and Intervention Board will be kept under close review by Ministers. Various noble Lords have expressed some misgivings that perceived failures in the system to date might mar the operation of the selective cull. We very much hope that, however accurate or inaccurate their perceptions, the selective cull will be a smooth and efficient operation. Operational details will be provided in a scheme booklet to be sent to all beef and dairy farmers probably in the week beginning 10th February. Perhaps I may echo a point made by the noble Lord, Lord Mackie. Tracing will be very thorough, as will be all the other details connected with the scheme, in the expectation of an EU mission to examine the detail of the procedure of the selective cull in due course.

The State Veterinary Service will be thorough but it will also be as flexible and sensitive as possible. The SVS has already started detailed discussions with farmers. Any practical difficulties experienced by

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farmers will be handled, we hope, both with sensitivity and consistency. I pick up a point made by the noble Lord, Lord Palmer. We shall seek wherever possible, and wherever requested, to phase the slaughtering of a herd with the corresponding need to complete the cull as quickly and sensibly as we can. But we hope that flexibility and sensitivity will be able to accommodate the concerns raised by the noble Lord, Lord Palmer.

We shall liaise closely with farmers to achieve minimum disruption to herd management in every other way. It goes without saying that welfare issues will be uppermost in the practical arrangements made.

My noble friends Lord Stanley and Lord Grantchester asked about cohorts and feeding groups. The aim is to identify animals which are most likely to have been exposed to the risk of infection and to slaughter and destroy them. The basis of that approach is that feed containing meat and bonemeal has been the main and perhaps the only source of BSE infection for cattle. Scientific evidence suggests that most cattle were infected by eating such feed when they were less than six months old. The scheme is accordingly targeted on animals which are likely to have been exposed when they were young to the same risk infection from solid feed as confirmed BSE cases. A group of animals born on the same farm during a particular period is referred to as a cohort. That is not necessarily all the animals born in the same year. It will depend on calving patterns and feeding history.

We recognise, as does the State Veterinary Service, that management patterns vary on different farms and the risk of infection by feed may straddle two cohort years, or be restricted to only a part of one cohort year. Therefore we hope that through sensible investigation by the SVS and sensible access to farmers' records, we shall be able to reflect those sensitivities.

The noble Lord, Lord Grantchester, can be reassured that we have developed the cull proposals in conjunction with the European Commission and the Standing Veterinary Committee. We are confident that they are familiar with the approach that we are adopting to the SVC.

My noble friend Lord Stanley asked what would be the case where farm records did not exist. There are standard procedures for dealing with such circumstances. Enforcement authorities and the SVS currently check farm records, and should advise farmers of any inconsistencies and take the appropriate action. Farmers have been obliged to keep these records since 15th October 1990, and they should have been visited by the SVS or the enforcement authorities since then. I reassure my noble friend Lord Stanley that extra staff have been taken on and trained in order to cope with the selective cull.

I turn to payments and compensation. I shall deal first with the matters of quota and premia raised by the noble Lord, Lord Carter. An exemption has been granted to those affected by the cull to lease dairy quota after 31st December 1996. Producers affected by the selective cull will be able to lease out unused permanently held quota provided that they registered

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with the intervention board by 31st December. That lease cannot be initiated until the slaughter has taken place.

To turn to the beef special premium and suckler cow premium, we have approached the European Commission about the position of animals slaughtered compulsorily during the scheme's retention periods. We hope to advise further on that point in the near future.

I reassure my noble friend Lord Stanley that we have agreed a target with the intervention board that payments should be made within 21 days of the date of slaughter or the completion of the farmer's registration with the board, whichever is the later. Moreover, payments will be made electronically, straight into a farmer's bank account, rather than using the system that is part of the over-30-months scheme, whereby payments are sent first to a third party before being sent on to the farmer. In any event, we shall closely monitor the achievement of the 21-day target.

We understand completely the sensitivities and concerns which the detailed compensation and top-up arrangements have provoked. They were discussed in detail with farming interests. We believe that our proposals represent a fair balance for both the farmer and the taxpayer. I hope that that will bring some pleasure to my noble friends Lord Marlesford and Lord Peyton.

I will give a very quick outline of the arrangements. The compensation per animal is not capped in any way whatever. I stress that point to the noble Lords, Lord Carter and Lord Mackie, who suggested that capping might extend to the compensation. It does not. In the case of male animals, market value will be paid whatever that market value is; and for female stock, compensation will be either at market value or 90 per cent. of replacement value, whichever is higher. I stress that there is no capping on that.

The cap relates to top-up. For herds which lose more than 10 per cent. of their productive animals a top-up payment over and above the compensation will also be available in recognition of the dislocation that may be caused until herds are properly re-established. The top-up, for which both suckler and dairy herds may qualify, is capped at £250 per animal. However, the compensation for that animal is not capped. It is important to stress that difference.

I also assure the noble Lord, Lord Grantchester, that the top-up will be cumulative. It will be recalculated if further animals are taken from a herd at a later date; for instance, if the maternal transmission study suggests that additional animals should be taken. So there will be a recalculation and a reapplication, and further payments, if triggered, will be made to the farmer.

A number of noble Lords dealt with the definition of herd size. I stress that we are entirely sympathetic to the range of opinion that has emerged from the farming industry and others as to how this issue might be approached. We are also very sympathetic to the impact on closed herds. We understand the difficulties. That is why compensation will be one and a half times the normal top-up rate.

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The definition of herd size has generated some debate. I stress that we reflected carefully on the representations made. We should look at the productive potential of animals in the herd over the relatively short period of the cull. The top-up was designed to reflect to some degree the dislocation to a business arising from the loss of a significant number of animals over and above the compensation.

A period of adjustment, while replacements are integrated into the calving and milking pattern of the herd is understandable. However, it would be impractical and time-consuming to seek to measure the exact period and detail of each adjustment and any associated costs for each and every business. Therefore we have to use sensible guidelines which can act as a proxy measure. I do not intend to go into the exact detail of the guidelines today, but they will be made available to all farmers. I shall, if pressed, be happy to explain them to others at an alternative time.